MUMBAI, Oct 3: Two leading private sector banks - Catholic Syrian Bank (CSB) and Tamil Nadu Mercantile Bank (TMB) - are up for sale. The parties which made an aborted bid to take over the management control by cornering their shares could not bring in the required fund to the tune of Rs 100 crore as stipulated by the Reserve Bank of India as a precondition to transfer the shares.The Bangkok-based Sam Vaidya group of Surajan Chanrsi Chawla had offered to sell the 38 per cent stake acquired earlier from the market at a very high premium to the Hinduja's floated new private sector bank, Indusind bank. Soloman Raj, Managing Director of Indusind Bank told The Indian Express that the ``two banks are already being offered to us for take over, but our bank culture does not fit into the operations of these two private banks.''According to sources, there is no buyer as the current promoters are trying desperately to get out of the banks. The NRI group had acquired around 54.14 lakh shares which constituted 38 per cent stake in the Kerala-based CSB which is the third largest private sector bank in the country with a networth of Rs 29 crore and a branch network of 284. It has a staff strength exceeding 3000 and the bank could make only marginal profit.While the Foreign Investment Promotion Board (FIPB) and the Cabinet Committee on Economic Affairs had recently cleared the NRI investment, RBI had made it clear that it would give permission to transfer these controlling stake only if the Chawlas infuse Rs 100 crore to augment the capital adequacy ratio (CAR) of the bank. Since 1995, the bank has not been able to achieve the 8 per cent CAR and the bank's proposal for a Rs 65 crore rights/ public issue was not cleared by the RBI.CSB would require an infusion of Rs 80 crore to meet the 8 per cent CAR. The Chawlas could not bring in that much money and the poor state of the capital market blocked the chances of a public issue. The RBI also did not allow public issue before achieving the 8 per cent CAR. Hence the NRI group offered to sell these stakes to a few parties. Recently, the Chawlas had inducted two directors on its board. The Chawlas were able to have a major say in the management, but the takeover plan did not work out due to the lack of funds. The shares of Rs 10 face value were acquired at a rate of Rs 85 and there were no takers for the offer due to the poor capital market scenario.In the case of Tamilnadu Mercantile Bank (TMB), the Essar group had acquired a stake from the Nadar group but it had to sell back the shares. TMB, with an equity base of Rs 45 lakh and staff strength of around 2000, has also been performing poorly and the Essar bid to take over did not work out. ``This is a sensitive issue which is now pending the final decision of the Company Law Board. I cannot make any comment about this,'' a TMC official based in Tuticorin told The Indian Express.
